Stock Alert: Reata Pharmaceuticals Tanks 30% As Rare Genetic Disease Drug In Limbo

(RTTNews) - Shares of Reata Pharmaceuticals Inc. (RETA) tanked nearly 30% on Monday morning after the drug maker's Omaveloxoloneon, a drug being developed to treat a rare neurodegenerative disorder, hit a roadblock.

RETA is currently trading at $109.54, down $46.65 or 29.87%, on the Nasdaq.

In October 2019, the company announced positive results from Phase 2 trial of Omaveloxoloneon for Friedreich's Ataxia, a rare genetic disease that causes difficulty walking, a loss of sensation in the arms and legs, and impaired speech.

However, the FDA are still not convinced with the data to grant approval for the drug. The regulator has asked the company to conduct a second pivotal trial that confirms the results of the Phase 2 study with a similar magnitude of effect.

However, Reata has proposed a crossover study to provide additional effectiveness of the drug, because conducting another trial would be difficult due to limited number of patients, long-time taken for the trial and the impact of the ongoing COVID-19 pandemic.

The company has said it would measure the effect of omaveloxolone in patients in the control arm of MOXIe who are receiving the med in the open-label extension.

The company said if the FDA agrees to the proposal, it will complete the crossover study as early as fourth quarter with an NDA to follow in the first quarter of 2021.

If the FDA rejects the proposal or if the data are not supportive, the company plans to evaluate whether it is feasible to conduct a second pivotal study.

Meanwhile, Reata reported a second-quarter loss that which nearly doubled to $67.9 million or $2.03 per share from $34.4 million or $1.14 per share last year. Analysts polled by Thomson Reuters estimated a loss of $2.84 per share for the quarter.

Total collaboration revenues for the quarter dropped to $3.1 million from $7.8 million last year. Analysts had a consensus revenue estimate of $1.04 million.